CTSI Requirements and Guidance on seeking approval as a Consumer ADR Body operating in non regulated sectors.

CTSI Requirements and Guidance on seeking approval as a Consumer ADR Body operating in non regulated sectors. For the purpose of The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 as amended and Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes ADR Competent Authority 1

Contents 3 GETTING STARTED ADR APPROVAL: REQUIREMENTS 7 12 15 17 21 24 27 29 32 ACCESS EXPERTISE, INDEPENDENCE AND IMPARTIALITY CONFLICT OF INTEREST PROCEDURES TRANSPARENCY EFFECTIVENESS FAIRNESS LEGALITY GROUNDS TO REFUSE TO DEAL WITH A DISPUTE CITIZENS ADVICE 'ADR HELPDESK' FUNCTION APPENDICES 32 38 39 43 46 48 50 A DEFINITIONS B PERMITTED GROUNDS FOR DISPUTE REFUSAL C INITIAL APPLICATION INFORMATION D ANNUAL ACTIVITY REPORT E TWO YEARLY ACTIVITY REPORT F WEBSITE INFORMATION & ODR INFORMATION CHECKLIST G TRADER INFORMATION REQUIREMENT 2 Chartered Trading Standards Institute

Getting started What is ADR Approval? Various organisations across the UK and Europe provide alternative dispute resolution (ADR) as a simple, low cost way to resolve consumer goods and service contract disputes between traders and consumers out of court. Legislation now requires traders to give consumers information about an ADR organisation who could help them. This legal information requirement will be triggered when the trader cannot resolve a dispute they have with a consumer using their internal processes. The ADR organisation, they must provide information about, can only be one that has been checked and approved to ensure the independence, quality and accessibility of the service it provides. An approved ADR provider will be able to resolve both online and offline disputes and can only refuse to deal with a consumer who initiates a complaint with it, under very limit circumstances. To gain approval, an ADR organisation must apply to one or more of the relevant UK Competent Authorities for the types of transactions it deals with or that have been assigned to it in particular. In the UK the Competent Authorities are: The Financial Conduct Authority (In relation to the Financial Ombudsman Service in particular); Legal Services Board (In relation to the Office for legal Complaints in particular); Civil Aviation Authority; Gambling Commission; Gas and Electricity Markets Authority; Office of Communications Lead enforcement authority for the purposes of the Estate Agents Act 1979. These are the relevant Competent Authorities to make an application to, to gain ADR approval in relation to disputes for which they have regulatory responsibility, an oversight or have been specifically assigned responsibility. Where the dispute falls outside the remit of these Competent Authorities the Secretary of State is the relevant Competent Authority. However, the Secretary of State has delegated responsibilities for dealing with applications and approval in its role as Competent Authority to the Chartered Trading Standards Institute (CTSI). CTSI will also act for the Secretary of State, as the single point of contact for all the UK Competent Authorities. Some ADR providers resolve disputes within the remit of more than one Competent Authority. Where they do this, the ADR provider must be assessed & approved separately by each Competent Authority. The legal requirements for the appointment of Competent Authorities and the ADR approval process that Competent Authorities assess each applicant against, are set out in The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 and, the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 (In this guide referred to as the regulations ). ADR Competent Authority 3

Do all ADR providers have to obtain approval? No. However, when a trader cannot resolve a dispute with a consumer in relation to a goods or service contract, you cannot be the ADR organisation the trader is legally required to inform the consumer about, if you are not approved. The requirement for a trader to direct a consumer to an approved ADR body if a dispute reaches deadlock, applies to all sectors with limited exceptions. One exception in consumer disputes is the health sector. For definitions on the meaning of health services as well as consumer, trader, sales contract and service contract, see appendix A to this guide. These are all important definitions in deciding if the trader information requirements apply. Some organisations ( intermediaries ) may provide assistance to consumers to help them resolve a dispute by providing legal advice or directing them to another appropriate person for help (commonly referred to as signposting ), or even just advising them that they should try to resolve the problem with the trader first. This is not ADR provided that there is no element of being actively involved in trying to resolve the dispute between the consumer and trader. In appendix G, we have provided some basic guidance on the trader information requirements A & B that were introduced on 1st October 2015, as well as additional information requirements for online traders from the 9th January 2016. Can all ADR organisations apply for approval? Nearly all ADR organisations can apply for approval, as can many organisations that perhaps do not consider themselves as an ADR provider. To be approved, you must provide the application information requested in appendix C to this guidance, and provide any additional information CTSI requires to be satisfied that you can either; meet the requirements of Schedule 3 & the regulations (the requirements set out in the main body of this guide) or that the requirements will be met within a reasonable time of approval being granted. Please note that some other Competent Authorities have the legal power to require additional requirements to be met, including binding solutions on traders if these are for higher consumer protection purposes. CTSI does not have such legal powers. What is the application and approval process? The application and supporting documents should be sent to CTSI adrenquiries@tsi.org.uk (See appendix C). An auditor will be appointed to assess your application. Your auditor will work with you to help answer any concerns you have about meeting the requirements. Where you need to make changes to your organisation, policies or procedures, and provided that this can be done within a reasonable time, your approval will not be delayed. We will specify what we consider that reasonable time to be in consultation with you as part of your application. The CTSI auditor assessing your application will work with you to decide a deadline for what is a reasonable time to make any changes you are planning, and comment on your ability to make those changes. An audit check will be made to confirm that those changes have been made. While the auditor can advise you on meeting requirements, they cannot implement those changes for you as a consultant might. If there is any further information your auditor needs to see to be satisfied that you meet the requirements to be approved, they will tell you this and the format they would like the information in. 4 Chartered Trading Standards Institute

In the majority of cases, there will be an onsite visit to your offices. The auditor will discuss your application in detail, talk with the ADR official/s and clarify any further work that need to be done to gain approval. Once satisfied that the requirements are met (or will be), the auditor will notify CTSI of their findings, and on payment of the audit invoice, CTSI will subsequently inform you in writing that you have been approved. The date of this letter will be your approval date. If you request one, we can also provide a summary of the audit findings. Despite the best endeavours of our auditor to help you achieve approval, if they cannot be satisfied you have met or will meet the requirements; your application will need to be rejected. If this happens, CTSI will write to you explaining this decision and the grounds for it. Once I have achieved approval is that all I need to do? No. The approval process creates an ongoing relationship with the Competent Authority. You will need to advise CTSI in writing if any of the information you provided as part of your application (including additional information requested by CTSI) has changed. In addition, within one month of the anniversary of your approval date, you will need to publish on your website a report detailed in appendix D and every second year supply CTSI with the information detailed in appendix E. The information required in these reports is set out in appendices D and E of this guidance. Based on the information in these reports, CTSI is required to assess annually, your continuing compliance with the requirements of Schedule 3 of the regulations. If CTSI has reason to believe that you are no longer meeting the Schedule 3 requirements, and the reason for this is within your control, we are required to issue you with a written notice. That written notice will identify what requirement is not met, and request that it is promptly corrected or at most within 3 months of the date of the notice. If you fail to correct the problem and it is a serious failure, we are required to write to you withdrawing your approval. CTSI would provide you with details of the appeal mechanism against this decision, along with the written notice. What does approval cost? Charges: A full audit is completed on receipt of the initial application and supporting documents. The charge made by CTSI to the applicant is for the auditor s time and is charged at 750+VAT per 8 hours. Part days will be charged pro- rata. The reporting functions laid out in Schedule 5 & 6 of the ADR Regulations, will need to be fulfilled by all approved ADR bodies within the prescribed deadlines. Where an auditor s intervention is required for issues regarding the reporting, or for areas where feedback or investigation shows potential noncompliance, a fee of 750(+VAT) per 8 hours may be charged. ADR Competent Authority 5

The average approval cost has been 2500 3000 and generally there are no further fees in subsequent years, unless potential non-compliance applies. Under this regulation, CTSI, on behalf of the Secretary of State, is not required to approve an application if there is a fee outstanding. Once an auditor has been appointed, these fees will become chargeable whether or not an application is successful or reaches completion. How do I apply? Please forward your completed initial application (appendix C) and other supporting documentation to adrenquiries@tsi.org.uk. The audit process is designed to be dynamic and for the auditor to support the ADR body towards approval. However, the approval process is necessarily robust and the specific requirements are largely restricted by the relevant directive and implementing regulations. Below are the requirements you will need to comply with to become and remain an approved ADR body. There are 7 main areas you need to consider in relation to the operation of your organisation. These are: Access Expertise Independence Impartiality Transparency Effectiveness Fairness 6 Chartered Trading Standards Institute

ADR Approval Requirements Access Legislation ref Requirement Guidance Evidence/Auditor review Part 2:9 (2a) An ADR applicant must supply with an application, the information contained in schedule 2 of the ADR Regulations. This information must be supplied in detail and every point (a-i) must be covered in the fullest detail possible. Appendix C gives full detail of the required information. If you are applying for approval in anticipation of creating a brand new ADR body, or have to make changes to policy and procedures etc, our judgement for granting approval will be on the basis that we can be satisfied that you will meet the requirements within a reasonable time of your ADR body being formed. l The auditor will access the website and test processes. We will specify what we consider that reasonable time to be, in consultation with you as part of your application. Part 2:9 2 (b) An ADR applicant must supply other information, as requested by the Competent Authority in order to assess whether the applicant meets the requirements in Schedule 3 CTSI or the auditor appointed by CTSI may request information to support the application by the ADR applicant. l changes that need to be communicated are: addresses, ADR staff, policy changes, etc. Part 2:11 (1) Notify, without undue delay, any changes to the initial application and any further information requested by CTSI that was used in order to assess whether you met the requirements to be approved. You are required to notify CTSI of any changes to the initial application information, or information relevant to your ongoing approval. ADR Competent Authority 7

Legislation ref Requirement Guidance Evidence/Auditor review Part 2:11 (2) & Schedule 5 Provide and publish on your website within one month of the first anniversary of the approval date and within a month of each following anniversary, an annual activity report relating to the full preceding year. The report needs to contain all the information listed in appendix D. The information that you are required to provide annually in your report is set out in appendix D. The deadline for this report to be submitted to CTSI is within one month of the first and subsequent anniversaries, of the date you were granted approval. The report will relate to activities that have occurred within that year only. l Planning needs to take place to ensure that the correct data is being collected and collated. Part 2:11 (3) & Schedule 6 Provide to the relevant Competent Authority, within one month of the second anniversary of the approval date, and within a month of each successive two year period, an activity report relating to the two full proceeding years. The report needs to contain all the information listed in appendix E. The additional information that you are required to provide to CTSI every 2 years, is set out in appendix E. The report will relate to activities that have occurred within that two-year period only. CTSI will use this information primarily for the collation of statistics required by the EU Commission and other stakeholders. To assess whether you are still meeting approval requirements. l Planning needs to take place to ensure that the correct data is being collected and collated. Schedule 3:1 (a) ADR body offers alternative dispute resolution services for domestic and cross border disputes on consumer contracts initiated by a consumer against a trader. An approved ADR body needs to be willing to accept domestic and cross border disputes from consumers regarding a consumer contract dispute. l Samples of consumer complaints, both domestic and cross border will be requested. 8 Chartered Trading Standards Institute

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3:1 (b) Are not formed as an ADR organisation simply to deal with one domestic or cross border dispute The ADR body needs to be able to prove that they are independent, impartial, and transparent etc.; this cannot be done with only one complaint. l Samples of complaints will be seen by the auditor on site visit. The auditor will pick these at random. Schedule 3:1 (c) The ADR body does not offer ADR services where an ADR official responsible for the dispute is either employed, or remunerated directly by a trader who is party to the dispute. l Evidence of who staff are employed by l Potentially discussed in interviews with ADR officials l Staff budget detail and where money comes from for salaries. Amendment Regs 19-1 & 19A -1 A trader who is obliged to use ADR by law, rules of a trade association, or term of contract, must provide the name and website address of the ADR entity or EU listed body on their website (if available), or in general terms and conditions of sales or service contracts (if available). An online trader must provide a link to the ODR platform in an offer made to the consumer by email. Both an online trader and online market place must provide a link to the ODR platform on their website. This requirement is met by means of a link on your website to the appropriate page of the ec.europa website. l Evidence will need to be seen on website. ADR Competent Authority 9

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3 (2a) Maintain an up-todate website which provides the parties in dispute with easy access to information concerning the ADR procedure offered by the body. An up to date and user-friendly website is an essential tool for the consumer and trader ( the parties ) in dispute to access your service. The website must allow the electronic submission of the initial complaint and related/subsequent documentation. l The auditor will access the website and test processes. A website is required to address many of the requirements you will need to meet for initial and ongoing approval. ADR approval is applicable to Consumer to Business disputes only and does not cover Business to Consumer or Business to Business disputes. Schedule 3 (2b) Provide parties, at their request, with information concerning the ADR procedure in a durable medium. A durable medium means paper or email, or any other medium that (a) allows information to be addressed personally to the recipient, (b) enables the recipient to store the information in a way accessible for future reference for a period that is long enough for the purposes of the information, and l We will expect to see what you propose to send out if information on the ADR procedure is requested. (c) allows the unchanged reproduction of the information stored; Schedule 2 (c) Ensure that the website enables a consumer to file an initial complaint submission, and any necessary supporting documents, on line. l The auditor will access the website and test electronic processes. Arrangements. 10 Chartered Trading Standards Institute

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 2 (d) Enable the consumer to file an initial complaint submission by post. l The auditor will check that the body s address is prominently displayed and also examine the postal process. Schedule 2 (e) Enable the exchange of information between the parties via electronic means or, if one of the party wishes by post. Electronic means can be online via website or email and should allow the attachment of relevant documents (evidence, defence, photographs etc.). You must make provision for those that do not have access to electronic communication methods to use the post. l The auditor will test the electronic process and also examine the postal process. Schedule 2 (f) Accept both domestic and cross- border disputes, including disputes referred via the online dispute resolution platform. Domestic Dispute is defined as: a dispute concerning contractual obligations arising from a sales contract or a service contract where, at the time the consumer orders the goods or services, the consumer is resident, and the trader is established, in the United Kingdom. Cross Border Dispute is defined as: a dispute concerning contractual obligations arising from a sales contract or a service contract where, at the time the consumer orders the goods or services, the trader is established in the United Kingdom and the consumer is resident in another member State; The Online Dispute Resolution (ODR) platform is an EU mechanism for directing disputes regarding online purchases to the appropriate approved ADR provider. You need to have a mechanism for receiving disputes via the ODR platform. ADR Competent Authority 11

Expertise, Independence and Impartiality Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3, 3 (a) That you ensure each ADR official possesses a general understanding of the law, and the necessary knowledge and skills in the field of out of court or judicial resolution of consumer disputes, to be able to carry out their functions competently. ADR official is defined as: An individual who (solely or with other persons) is involved in the provision of alternative dispute resolution procedures offered by an ADR entity, oradr applicant, whether as a case handler or in a management capacity. The particular operating model of some ADR providers is such that where large numbers of case handlers are involved; auditors will be looking to see that the requirements are met based on an appropriate sample of ADR officials within the organisational structure. We suggest some record should be maintained of who within the organisation has been judged competent to be an ADR official at any particular time including who has made that judgement and on what basis. l CV s l Training logs l Appraisals and objectives with timely reviews and follow up. l Records of case monitoring and follow up. l Records of complaints to ADR body on case handling and follow up. Schedule 3 (b) That you ensure each ADR official is appointed for a term of office of sufficient duration to ensure the independence of their actions and that they cannot be relieved of their duties without just cause. To record the term of office of each ADR official and why you believe it is sufficient to ensure independence of actions. To record the reasons why any ADR official was removed from their position before the end of their term of office. Where staff are sub contracted on a case by case basis, or for short periods, records why they have ceased working. l Clear records of start and finish (or whether permanent ) dates and why they ceased employment. l Contact details of sub contracted staff in case evidence needed. 12 Chartered Trading Standards Institute

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3 (c) That you ensure no ADR official discharges their duties in a way that is biased to either party of the dispute, or their representatives. l This should be within the written complaint handling process l Could be in terms of employment l Potentially discussed in interview with ADR officials. Schedule 3 (d) That each ADR official is remunerated in a way that is not linked to the outcome of the dispute resolution procedure. l Log of disclosure of conflict of interest/ bias l Potentially discussed in interviews with ADR officials. Schedule 3 (e) That you ensure each ADR official, without undue delay, discloses to you any circumstances that may, or may be seen to affect their independence and impartiality or give rise to a conflict of interest with any party to the dispute they are asked to resolve. The disclosure requirement requires not only circumstances that may affect independence and impartiality, but also that may be seen to do so. If the organisation only uses one ADR official the parties need to be made aware of the conflict. l Log of disclosure of conflict of interest/ bias l This should be within the written complaint handling process l Potentially discussed in interviews with ADR officials. ADR Competent Authority 13

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3 (f) The obligation to disclose such circumstances shall be a continuing obligation throughout the dispute resolution procedure. l Log of disclosure of conflict of interest/ bias l This should be within the written complaint handling process l Potentially discussed in interviews with ADR officials. Schedule 3 (g) That where ADR officials are employed or remunerated exclusively by a professional organisation or business association, a ring fenced budget is available. In this case you must have a separate and dedicated budget which allows remuneration of ADR officials and the certified ADR operation. There should be no link between dispute result and remuneration of the ADR Official. l It might be necessary to view budget information l Alternatively this requirement might be met by a clear and unambiguous statement, signed and given to CTSI for our records with an unsigned copy made available on the relevant website. Schedule 3 (h) That you engage an equal number of representatives of consumer interests and trader interests, where the operating model of your dispute resolution procedure is to have a group of more than one person (a collegial body) with representatives of both professional organisations, or business associations and consumer organisations. Where your ADR procedure is such that the dispute is examined by a panel of representatives, then equality is required in relation to consumer and business interests. l Details to be provided of named persons on panel their job titles and roles l Details of past panels. 14 Chartered Trading Standards Institute

Conflict of interest procedures Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 4 (a) There is a procedure in place to replace an ADR official who declares they have a conflict of interest, in relation to a dispute. Clearly, this option is not possible where you operate as only one ADR official. Document the details of this procedure. l We will expect to see evidence that you have made both parties aware that you are the only ADR official l Log of disclosure of conflict of interest/ bias l This should be within the written complaint handling process l Could be added in contracts of employment l Potentially discussed in interviews with ADR officials. Schedule 3: 4 (bi & ii) If an ADR official who declares a conflict of interest cannot be replaced by another ADR official, then the ADR official must stop conducting the dispute resolution procedure. The procedure must require; where possible, that a proposal is put to the parties that they submit their dispute to another ADR organisation competent to deal with it. Record the details of this occurrence, the reasons for what happened and decisions made. Recording the information is important as the percentage of discontinued dispute resolution procedures that occur, forms part of the activity information and reports that you need to supply to CTSI. In relation to the annual report, the reasons for discontinuation are also required. If another ADR body is offered to the parties, it should be a certified one and must be competent in dealing with the type that the dispute. l Log of disclosure of conflict of interest/ bias l This should be within the written complaint handling process l Could be added in contracts of employment l Potentially discussed in interviews with ADR officials. ADR Competent Authority 15

Legislation ref Requirement Guidance Evidence/Auditor review 3: 4 (ci-iii) Where it is not possible to transfer the dispute to another ADR body this must be notified to the parties with details of the circumstances of the conflict of interest. The parties have a right to object to that official continuing to handle their dispute and that the organisation can only continue to deal with the dispute if no party objects. A record of the full situation should be kept. Accurate reporting is important as this is required for the annual report. l We will expect to see evidence of the ADR informing both parties of the circumstances l We will expect to see evidence of the ADR informing both parties of their rights to object the conflict l We will expect to see documents containing evidence stating that neither party objected l Potentially discussed in interviews with ADR officials. 16 Chartered Trading Standards Institute

Transparency Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 5 Make publicly available on your website or on a durable medium upon request, the following information in a clear and easily understandable way. A durable medium is defined as: paper or email, or any other medium that (a) allows information to be addressed personally to the recipient, (b) enables the recipient to store the information in a way accessible for future reference for a period that is long enough for the purposes of the information, and (c) allows the unchanged reproduction of the information stored; Schedule 3: 5 (a) Your contact details including postal address and e mail address. This needs to be easily accessible and prominent. l Information should be easily found by auditor on the website. Schedule 3: 5 (b) A statement that you have been approved as an ADR body by the appropriate competent authority (Once approval is granted). l The auditor will assess this process from an average consumer s point of view via the website. Schedule 3: 5 (c) Your ADR officials, the method of their appointment and duration of their appointment. Information needs to be clear and cover all points. l Information should be easily found by auditor on the website. Schedule 3: 5 (d) The name of any network of bodies which facilitates cross border ADR of which it is a member. l Information should be easily found by auditor on the website. ADR Competent Authority 17

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 5 (e) The type of dispute (domestic or cross border) that you are competent to deal with, including any financial thresholds which apply. This needs to be clear but may be within the ADR process on the website. It is advisable to put all information in Schedule 3:5 in one place so that it is clear and transparent. l Information should be easily found by auditor on the website. Schedule 3: 5 (f) The ADR procedural rules that you operate and the grounds on which you can refuse to deal with a dispute as outlined in Schedule 3:13. l Information should be easily found by auditor on the website. Schedule 3: 5 (g) The language in which you will accept an initial complaint. l Information should be easily found by auditor on the website l Should also be clear in complaint submission guidance for consumers. Schedule 3: 5 (h) The language in which the ADR procedure can be conducted. l Information should be easily found by auditor on the website l Should also be clear in complaint submission guidance to consumers. 18 Chartered Trading Standards Institute

Schedule 3: 5 (i) The principles you apply, and the main considerations you take into account when seeking to resolve a dispute. (For example: legislation, considerations of equity, codes of conduct etc.) This should be detailed so that it is clear to those using your ADR service. l Information should be easily found by auditor on the website. Schedule 3: 5 (j) The requirements, if any, which a party to a dispute need to have met before the ADR procedure can commence. This needs to be clear and detailed. l Information should be easily found by auditor on the website. Schedule 3: 5 (k) A statement as to whether or not the party to a dispute can withdraw from the ADR procedure once it has started. This needs to be clear and detailed. l Information should be easily found by auditor on the website. Schedule 3: 5 (l) The costs to the parties, if any, including the rules, if any, you have on awarding costs at the end of the ADR procedure. This needs to be clear and detailed. l Information should be easily found by auditor on the website. Schedule 3: 5 (m) The average length of the ADR procedure. This needs to be clear and detailed. l Information should be easily found by auditor on the website. Schedule 3: 5 (n) The legal effect of the outcome of the ADR procedure. For example, is it binding on one or both of the parties or is it a suggested outcome for the parties etc. In addition, the enforceability of the outcome and the penalty for noncompliance, if any. This should be in clear language. l Information should be easily found by auditor on the website. ADR Competent Authority 19

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 5 (o) A statement as to whether or not the ADR procedures you operate can be conducted by oral or written means (or both). l Information should be easily found by auditor on the website. Schedule 3: 5 (p) Make publicly available on your website, or on a durable medium upon request, the annual activity report that you are required to supply to CTSI. The most recent report needs to be publicly available. l Information should be easily found by auditor on the website. Amendment Regulations 14 A: 1 (a & b) Cooperate with other ADR entities in resolving cross- border disputes & conduct regular exchanges of best practices with other ADR entities regarding settlement of cross-border & domestic disputes. This ensures transparency between different ADR bodies seeking dispute resolution and cooperation to continually improve dispute resolution techniques and processes. l The auditor will ask to see evidence of this when annual reports are due. Amendment Regulations 14 A: 2 (c) Take appropriate steps to cooperate with those consumer protection law bodies designated by the UK Government to enforce consumer protection laws. In particular with regards to the exchange of information on practices in specific business sectors which consumers have repeatedly lodged complaints. Share knowledge of particular sectors of business that are causing complaints will allow enforcers & those business sectors to work together in seeking to implement solutions. The introduction of this specific requirement indicates that any steps for exchange of information would be extra to that provided for, by data published in yearly and twice yearly reports. l The auditor will ask to see evidence of this when annual reports are due. 20 Chartered Trading Standards Institute

Effectiveness Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 6 (a) The ADR procedure you operate is available and is easily accessible to the parties irrespective of where they are located, both by electronic and non- electronic means. The ADR procedure must be available and easily accessible both online and offline and wherever the parties are located, including where applicable to parties in other EU member states. l This should be within the written complaint handling process. Schedule 3: 6 (bi) The parties must have access to the ADR procedure without being obliged to obtain independent advice or be represented or assisted by a third party, although they may choose to do so. Access to the ADR procedure must be permitted without being obliged to; for example, appoint a lawyer or a legal advisor. The procedure should not prevent the parties of their right to independent advice or to be represented or assisted by, for example, a friend at any stage of the procedure should they want to. The ADR body should advise parties of this requirement at the start of the process, and at suitable steps during the procedure. l This should be within the written complaint handling process. ADR Competent Authority 21

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 6 (bii) Your ADR procedure needs to be free of charge or available at a nominal fee for consumers. What constitutes a nominal fee will be dependent upon a number of factors specific to each ADR provider. Any small fee or charge can be referred to as a nominal fee. Irrespective of which part of the ADR procedure is utilised (mediation, Conciliation, adjudication) by the consumer, only a nominal fee may be charged. l This will be discussed with the auditor during the audit. There is no restriction as to the fee that can be charged to the trader and as such overall ADR costs are likely to be born directly by traders. Indirectly of course that cost is paid by consumers in the price they pay for goods & services. Some organisations such as the small claims section of the county court have fees that are tiered, depending upon the amount of the overall claim. However, the fee level at each tier should still be nominal, relative to the amount at dispute within the tier. The funding of ADR provision is not a burden the consumer must bear in the business model you operate. 22 Chartered Trading Standards Institute

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3: 6 (c) The parties to the dispute must be notified as soon as you have received the complete complaint file. Unless the parties have already been notified that you are refusing to deal with the dispute. Once a Complete complaint file has been received the parties in dispute need to be informed by the issue of a notice. A complete complaint file means all the relevant information relating to the dispute. This is not restricted to only the information from the consumer and trader, but also any required expert opinions, witness statements, external evidence etc. This is an important definition, as you will only have 90 days to provide an outcome to the ADR procedure from when the notice is given. Record when you consider that you have received a complete complaint file. l This should be within the written complaint handling process l where the parties have been notified of the complete complaint file will be a requested by the auditor. This figure needs to be recorded as annual report requires detail of cases being handled within 90 days. Schedule 3: 6 (d) The outcome of the ADR procedure must be notified to the parties within a period of 90 days from the date on which you have issued the notice confirming the complete complaint file has been received. However, in the case of highly complex disputes, you may, at your own discretion, extend the 90 calendar day time period. You will need to inform the parties of the extension and how long it will be. Record how and when parties were informed of any outcome and in complex cases, any extension time and the reasons why the case was considered highly complex. The judgement as to highly complex, will be dependent on the circumstances and would be relative to, for example, any non- complex cases you deal with. l This should be within the written complaint handling process l Evidence will be asked for on site visit. ADR Competent Authority 23

Fairness Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.7 (a) To ensure the parties have the possibility, within a reasonable period of time, of expressing their points of view regarding the dispute. The facility for the parties to do this should be within your process. This shows transparency and independence. l This should be within the written complaint handling process. Schedule 3.7 (b) To provide a party, upon request and within a reasonable time, with the arguments, evidence, documents and facts put forward by the other party to the dispute. This includes any statements made and opinions given by experts. Sharing of information assures the parties of the transparency and independence of the ADR entity. l This should be within the written complaint handling process. Schedule 3.7 (c) When provided with this information, you will need to allow the party a reasonable time to comment on the information and documents. A reasonable amount of time should be allowed for the parties to consider the documents and comments. l This should be within the written complaint handling process. Schedule 3.7 (d) To inform the parties to the dispute that they are not obliged to retain a lawyer or a legal advisor, but they may seek independent advice or be represented or assisted by a third party at any stage of the procedure. ADR body is expected to remind the parties of this right at suitable breaks or stages in the ADR dispute procedure and record this has happened. l It should be stated clearly within the written complaint handling process that is provided to the parties, that legal advice/ representation is not required but they can seek independent advice, or be assisted in the process by a third party. 24 Chartered Trading Standards Institute

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.7 (e) To notify the parties of the outcome of the ADR procedure on a durable medium and to provide a statement of the grounds on which the outcome is based. Durable medium for this purpose means paper or email, or any other medium that (a) allows information to be addressed personally to the recipient, (b) enables the recipient to store the information in a way accessible for future reference for a period that is long enough for the purposes of the information, and l It should be stated clearly within the written complaint handling process l Evidence will be seen on the onsite visit. (c) allows the unchanged reproduction of the information stored; Schedule 3.8 (a) Where the ADR dispute procedure is one that aims to resolve the dispute by proposing a solution, you will need to ensure the parties have the possibility of withdrawing from the procedure at any stage if they are dissatisfied with the performance or the operation of the ADR dispute procedure. The ability to withdraw from the ADR dispute procedure will not apply to a trader who is obliged to participate because they are either; legally required to do so or they are a member of a trade association and the trade association rules require it, or a term of a contract requires it. You need to ensure parties are informed of that right before the procedure commences. You should record when the parties were informed of any withdrawal rights. l This should be detailed in the written complaint handling procedure l Evidence can also be shown in case management notes or files. Schedule 3.8 (b) To inform the parties of their right to withdraw from the ADR procedure at any stage, should they wish to do so. ADR Competent Authority 25

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.8 (c) The parties, before agreeing or following a proposed solution, are informed that: (i) they have the choice as to whether or not to agree to, or follow the proposed solution; (ii) participation in the procedure does not prevent the possibility of seeking redress through court proceedings; The options of this requirement will not apply to a trader who is obliged to accept the solution proposed, if the consumer accepts it, because they are either legally required to do so; or they are a member of a trade association and the trade association rules require it; or a term of a contract requires it. You should inform both parties of the trader position before agreeing to, or following a proposed solution. l This should be detailed in the written complaint handling procedure l Evidence will be asked for to prove that this information is provided to the parties before the procedure commences. (iii) the proposed solution may be different from an outcome determined by a court applying legal rules; and (iv) the legal effect of agreeing to, or following the proposed solution. Schedule 3.8 (d) The parties, before expressing their consent to a proposed solution or amicable agreement, are allowed a reasonable period to reflect. Where the trader is under a legal obligation or under the rules of a trade association, required to accept the outcome; or a term of a contract requires it, (once the consumer has accepted the outcome), the right of reflection does not apply to the trader. You should advise the parties of the trader position where this is the case. l This should be detailed in the written complaint handling procedure. 26 Chartered Trading Standards Institute

Legality Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.11 (a) To ensure that if the ADR procedure aims to impose a solution on the consumer, and there is no conflict of laws (same law dispute), the solution imposed does not result in the consumer being deprived of the protection those laws allow for. That is, unless those laws are allowed to disapply, by agreement of the parties. This requirement only applies where your ADR procedure provides for you to impose a settlement on the consumer. No conflict of laws occurs, for example, when the dispute is purely a domestic dispute (i.e. between a UK resident consumer and a UK established trader). The more detailed meaning of domestic dispute & established are given in appendix A. The laws that you cannot deny the consumer in relation to a domestic dispute, are the UK statutory consumer protection laws. Sometimes these statutory consumer protection laws do not apply, but this is only where those laws say this can happen and only then, where both parties have agreed it can happen. l On site visit will examine sample of cases that have reached solution. Schedule 3.11 (b) To ensure that if the ADR dispute resolution procedure aims to impose a solution on the consumer, and there is a conflict of laws (conflicting law dispute), the solution imposed does not result in the consumer being deprived of the protection those laws allow for by virtue of the European country the consumer is habitually resident. That is, unless those laws are allowed to disapply, by agreement of the parties. This provision only applies where the ADR procedure provides for you to impose a settlement on the consumer. A conflict of laws occurs, when the law agreed to be applied in relation to the dispute is not the law where the consumer is habitually resident. For example a cross-border dispute (i.e. between a UK established trader and a non UK resident consumer). The settlement cannot deny the consumer their statutory consumer protections under the law of the EU Member State where they are resident. The more detailed meaning of cross-border dispute and habitually resident are given in appendix A. l On site visit will examine sample of cases that have reached solution. ADR Competent Authority 27

Legislation ref Requirement Guidance Evidence/Auditor review ADR Regs Amendment S.14.b An agreement between a consumer & trader to submit a cross-border or domestic dispute to an ADR entity, is not binding on the consumer if the agreement to do so was made before the dispute materialised and it deprives the consumer of the right to bring judicial proceedings in relation to the dispute. This requirement makes ineffective, for example, any contractual terms that bind a consumer to ADR as the only method to resolve a dispute, the terms being agreed before a dispute even arose. Such terms are also now controlled by means of The Consumer Rights Act 2015 provisions in relation to unfair contract terms. ADR Regs Amendment S.14.c Where an ADR entity aims to resolve a dispute by imposing a solution, that solution is not binding on a party to the dispute unless, before a party is notified of the outcome of the dispute resolution procedure; l the ADR entity notifies the party that the outcome will be binding and l the party specifically accepts that it will be binding This will not apply to disputes where no solution is to be imposed by the procedure, for example a solution is just proposed. This requirement will also not apply to a trader who is bound to an imposed solution because they are legally required to be or they are a member of a trade association and the trade association rules require it or a contract term requires it. Some sort of written or positive acceptance recording mechanism (in the case of online procedures) would be good practice, to avoid any later dispute as to acceptance being raised by either party aggrieved by the outcome. l This should be detailed in the written complaint handling procedure and there should be clear evidence that the information is provided to the parties before the start of the procedure. 28 Chartered Trading Standards Institute

Grounds to refuse to deal with a dispute Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.13 (a) (a) Prior to submitting the complaint to you, the consumer has not attempted to contact the trader concerned in order to discuss the consumer s complaint and sought, as a first step, to resolve the matter directly with the trader. You are allowed to refuse to deal with a dispute if the consumer has not attempted to try to contact and resolve the matter with the trader first. This does not mean that you cannot seek to help the consumer (or a trader) in ways, other than ADR. Appendix G sets out guidance on the trader information requirements. The attempt made by the consumer must be a realistic one, although it is an attempt that is required and many disputes arise because a trader fails to respond to attempts from a consumer to raise problems about a transaction. Schedule 3.13 (b) (b) The dispute is frivolous or vexatious. If the matter at dispute is one that appears trivial or petty then you may refuse to deal with it. However, this has to be judged carefully against an issue that is, for example, a minor defect. A minor defect being grounds for civil law liability. In addition, if the nature of the dispute is maliciousness and there appears no evidence of the problem reported, you may refuse to deal with it. Schedule 3.13 (c) (c) The dispute is being, or has been previously, considered by another approved ADR provider or by a court; The court may be a civil one or a criminal court that has been asked to consider, for example, compensation in relation to what would otherwise be a criminal matter. Only if the dispute has or is being considered by another listed approved ADR provider, can you refuse to deal with it. Schedule 3.13 (d) (d) The value of the claim falls below or above the monetary thresholds you have set. ADR Competent Authority 29

Legislation ref Requirement Guidance Evidence/Auditor review Schedule 3.13 (e) (e) The consumer has not submitted a complaint to you within the time period specified by you for dealing with complaints, provided that such time period is not less than the prescribed period. If your policies currently require a lesser time than the prescribed period then they will need to be changed to meet this requirement. It would be good practice for traders to point out, at the giving of final notice, that while consumers have at least the prescribed period to take a complaint to an approved ADR provider; the longer a consumer waits to initiate ADR procedures, the more difficult it can often be to obtain evidence and facts and this could be detrimental to their case. The prescribed period is defined in appendix A. Schedule 3.13 (f) (f) Dealing with such a type of dispute would seriously impair the effective operation of your ADR operation. This is wide ranging in its meaning and might cover, for example, a dispute relating to such a complex issue that it would consume all of your resources to deal with it and thus damage the quality or even ability of your organisation to be involved in any other disputes. Based on your previous experience, it would be good practice to set out examples of the type of despite that you have received in the past that may fall within this category. Schedule 3.14 The body ensures that it s policy regarding when it will refuse to deal with a dispute, including in relation to the level of any monetary threshold it sets, does not significantly impair consumers access to ADR A monetary limit that would unreasonably prevent access to your ADR procedure, will be a judgement based on your particular operating model, sector and the value of the disputes with which you consider. l Auditor will look at cases that the body have refused to deal with to see if the reasons for refusal are impairing consumer s access. 30 Chartered Trading Standards Institute